$3,000 per phony return; scam by the slice; siphoning the UAW; and other highlights of recent tax cases.
Concord, N.H.: William Bischoff, 76, of York, Maine, has been sentenced to four years in prison for operating a multi-million-dollar investment fraud scheme and failing to file federal income tax returns.
According to court documents and statements in court, from 2009 through September 2017 Bischoff defrauded more than two dozen clients of his financial advisory business by falsely promising to invest their money in real estate, structured legal settlements, high-yield notes and a recycling start-up. He further guaranteed returns that far exceeded market norms.
He stole $5,647,446.33 from defrauded investors, using money from some victims to make payments to other victims. He also provided monthly account statements to the victims that falsely represented the balance of their accounts.
Bischoff also failed to file individual federal returns for 2011 to 2015, costing the U.S. Treasury $568,845. He pleaded guilty in March to one count of wire fraud and one count of willfully failing to file federal returns.
Wilmington, Del.: Psychic Candy Miller, 40, has been sentenced to a year and a day for filing a false return.
According to statements at sentencing and documents filed in court, Miller, who operated a psychic readings business, filed false returns for 2010, 2011 and 2012, underreporting her income by $1,074,000.
This income was received from clients who were told by Miller that she was removing the negativity from their lives by anonymously donating their money to charities that Miller selected.
Miller made no donations and spent all the money on personal expenses. The scheme resulted in a total tax loss of $337,430.
Birmingham, Ala.: Preparer Patrice Anderson, 38, of Fairburn, Ga., has been sentenced to five years in prison for preparing and filing fraudulent returns through her Birmingham-area prep business, Queen’s Fast Tax, between 2009 and 2012.
Evidence showed that Anderson filed clients’ returns claiming undeserved refundable credits to inflate refunds. She then charged the clients up to $3,000 per return to file their taxes.
The court determined that Anderson had filed returns claiming more than $3.6 million in refunds in 2010 and 2011 alone, and that at least half the claimed refunds in those years were fraudulent.
Evidence showed that Anderson’s own 2010, 2011 and 2012 returns contained some of the same false items that were characteristic of the fraudulent returns she filed for her clients.
Medford, Mass.: Nikita Yanakopulos, 40, former owner of a pizza restaurant, has been sentenced to a year and a day in prison, one year of supervised release and a fine of $5,500 in connection with filing returns that failed to disclose the cash payroll payments he made to employees.
In February, Yanakopulos, former owner of Pinky’s Famous Pizza, pleaded guilty to two counts of aiding and assisting in filing false 941s.
Yanakopulos owned and operated Pinky’s from approximately 2000 to 2017, during which time he paid several employees by check and cash and other employees entirely in cash. Yanakopulos caused his payroll service to file 941s that only included the payroll paid by check. During those years, Yanakopulos made cash payroll payments to his employees totaling approximately $675,000, but failed to report those payments to his payroll service or pay the required withholding amounts to the IRS. He avoided paying FICA, Medicare and withholding taxes totaling approximately $172,000.
Colorado Springs, Colo.: Businessman Christopher Paul Kelly, 52, has been sentenced to 20 months in prison to be followed by three years of supervised release for tax evasion. Kelly, who pleaded guilty in December, was also ordered to pay $929,098.39 in restitution to the IRS.
According to case information, from 2001 through 2015 Kelly operated merchant card services businesses that sold vendors the ability to accept credit card payments. These businesses earned him taxable income, generating tax due of more than $500,000 in tax years 2006, 2007, 2012 and 2013. Between 2008 and 2015, Kelly rented homes as his personal residence and purchased or leased expensive cars.
Kelly avoided tax obligations by operating through various different companies, which continued to pay him hundreds of thousands of dollars. When contacted by the IRS, Kelly made false statements and then withdrew the balance of his 401(k) and cashed out the value of his life insurance account, eliminating the ability to place a levy on these accounts.
When the IRS levied Kelly’s bank account, he stopped depositing funds into that account and instead started depositing much of his income and paying personal expenses out of a bank account controlled by his common-law wife.
Valdosta, Ga.: Saferia Johnson, 34, Leo McGill, 51, and Detrone Middleton, 38, of Douglas, Ga., have been sentenced for aggravated ID theft and for involvement in an income tax fraud seeking more than $2 million in refunds.
Johnson and McGill were each sentenced to 70 months in prison; Middleton received 64 months. The defendants were also sentenced to jointly pay $1,498,776 in restitution to the IRS.
In 2012, the IRS began an investigation after receiving information that a number of accounts controlled by the trio and others had received a large number of federal refund deposits issued in the name of people other than the owners of the bank accounts. Investigators determined that Johnson, McGill and Middleton were involved in a scheme where fraudulent federal returns were filed for tax years 2010 and 2011 and refunds deposited into 45 separate bank accounts.
The defendants admitted to filing approximately 984 fraudulent returns using stolen IDs, including many belonging to minors, for tax years 2010 and 2011. The fraudulent returns sought total refunds of $2,082,275. Refunds totaling $1,498,776 were actually paid.
Harrison Township, Mich.: Monica Morgan, 54, widow of a former United Auto Workers executive, has been sentenced to 18 months in prison to be followed by a year of supervised release and ordered to pay a $25,000 fine based on her conviction for felony tax fraud.
Morgan, who pleaded guilty in February, admitted to filing fraudulent returns in which she failed to report hundreds of thousands of dollars in income for the years 2011 through 2014. Morgan failed to pay $190,747 in taxes owed.
She is the widow of former UAW vice president General Holiefield, who died in 2015. From 2010 to 2014, Holiefield was director of the UAW Chrysler Department and acted as the lead negotiator and the lead administrator for collective bargaining agreements between the UAW and Fiat Chrysler Automobiles.
According to court records, Morgan owned and operated Monica Morgan Photography and Wilson’s Diversified Products, based in Detroit. Her companies received hundreds of thousands of dollars from the UAW-Chrysler National Training Center during the years when Holiefield was a VP for the union. Morgan’s companies also received significant payments from Holiefield’s charity, the Leave the Light On Foundation.
The court also ordered Morgan to pay $190,747 in restitution to the U.S. Treasury.
Corpus Christi, Texas: Former CPA Brian Perez, 35, has been sentenced to 18 months in prison to be followed by three years of supervised release, for wire fraud and tax evasion. Perez was also ordered to pay $162,755 in restitution to his employer and $42,435.18 in criminal restitution to the IRS.
The court also ordered that funds fraudulently transferred to Perez’ tax withholding account at the IRS as part of the scheme be returned to victims. His refunds during his period of incarceration and supervised release will also be used to pay restitution to his victims.
Perez, a former Corpus Christi resident now of San Antonio, admitted that while working as a bookkeeper he orchestrated the fraudulent transfer of funds from his employer’s bank account to his personal tax withholding account. Perez also admitted he filed a false income tax return and requested a refund of the overpayment.
Perez defrauded his employer of $162,755 between March and August of 2015.